Prepare the journal entry on december

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Point 1: On January 1, 2011, Borstad Company purchased equipment for $1,180,000. It is depreciating the equipment over 25 years using the straight-line method and a zero residual value. Late in 2016, because of technological changes in the industry and reduced selling prices for its products, Borstad believes that its equipment may be impaired and will have a remaining useful life of 8 years. Borstad estimates that the equipment will produce cash inflows of $400,000 and will incur cash outflows of $295,000 each year for the next 8 years. It is not able to determine the fair value of the equipment based on a current selling price. Borstad's discount rate is 12%.

Question 1: Prepare the journal entry on December 31, 2016 to record the impairment.

Reference no: EM132479269

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